Hoekstra supports Elbers as tensions mount with parent group Air France-KLM

The Dutch finance minister shifted his support behind the boss of the country’s airline KLM on Monday as tensions mounted between him and the new chief executive of the company’s parent group.
Wopke Hoekstra gave his “wholehearted” backing to Pieter Elbers, who has been resisting moves by Benjamin Smith, head of Air France-KLM, to make his influence felt at the group, said a person familiar with the company.
Speaking on the margins of a finance ministers’ meeting in Brussels, Mr Hoekstra said he had endorsed Mr Elbers in a letter to KLM’s supervisory board and would discuss the company more broadly with his French counterpart, Bruno Le Maire.
Although Air France and KLM merged in May 2004, tensions between the two have persisted as neither wants to be seen as a subsidiary.
A leaked report from 2017 into the group found mutual suspicion and a culture clash between the French and Dutch sides.
No decision about the future leadership of KLM has yet been taken, said people close to the situation.
The divergent financial performance of both airlines has increased dissatisfaction within the group.
In the nine months to the end of September 2018, KLM had an operating margin of nearly 12 per cent, while Air France’s was 2.7 per cent, down 3.5 percentage points.
Mr Smith has already named a new chief executive of Air France, Anne Rigail, a 27-year veteran of the group, and Mr Elbers’ contract runs out in April this year.
A banker who has worked with the company said the company had “only one boss” and that Mr Smith needed to assert himself early in his tenure. Mr Elbers had previously had “weak managers” to deal with and had won over the unions.
A petition started by KLM staff in support of Mr Elbers has had almost 18,000 signatures. The petition said Mr Elbers had “led [KLM] through an extremely difficult time” and made the airline “capable of operating with glory on the world scene”.
Mr Smith took over as chief executive of the group last September, filling the shoes of Jean-Marc Janaillac who had resigned in May after losing a staff vote over a pay deal that had been rejected by Air France unions.
The Canadian faces myriad challenges including maintaining peace with the traditionally combative unions and turning round the French side of the operation. The challenge for Mr Smith at KLM is less about performance and more about bridging the culture gap between it and Air France.
The parent Air France-KLM group declined to comment. KLM did not reply to a request for comment.
Air France-KLM publishes its full-year results next week.In an interview with the Financial Times in September, Mr Smith said he aimed to build up “mutual trust and respect” and make it clear “it’s in everyone’s interest” to turn the carrier round.
Mr Smith also said he wanted the airline to stand on its own two feet, without government support, because it is not being “attacked in a disproportionate or unjust way, it just has a competitive model that doesn’t work”.
“It’s simple in my mind, eat or be eaten,” said Mr Smith, adding that is why “there is a lot more defence that we have to play”, including using Air France’s lower-cost offerings to build up space to develop the premium brand desired. FT

Re: CEO AF dà le dimissioni

Air France-KLM is discussing whether to replace Dutch unit head Pieter Elbers over concerns he may not fully support Chief Executive Officer Ben Smith’s plans to strengthen ties between the two carriers, according to people familiar with the matter.

Smith, who took the helm of the holding company in September, is keen for the heads of the Air France and KLM units to work closer together and back his drive to centralize more operations, said the people, who asked not to be identified discussing private plans. For example, the CEO wants to end the current practice of the airlines separately negotiating plane purchases and alliances, they said. French media La Tribune first reported Thursday that Smith may be pushing for Elbers’ departure.

Air France KLM Group Full Year Results News Conference
Pieter ElbersPhotographer: Christophe Morin/Bloomberg
Elbers’s current contract expires at the time of KLM’s April annual general meeting and the deliberations are focused on whether or not to extend his four-year tenure, the people said. The Dutch national is concerned that KLM will be dragged down by its worse-performing partner, one person said. The two national carriers merged in 2004, and have operated semi-independently since then, with the French government owning a 14 percent stake.

Supportive Petition
Air France-KLM declined to comment. A spokeswoman for KLM said Elbers’s future was a matter of concern at the airline, and almost 13,000 people have so far signed an online petition calling for him to stay on.

While Smith, a 47-year-old Canadian, took over Air France-KLM at a time of labor turmoil and costly strikes that claimed the job of his predecessor, a truce with most unions and progress with pilots have allowed him to turn his attention to other parts of the business. Challenges include tension surrounding higher profit margins at KLM, which Smith has made clear he wants to resolve.

To that end, Smith is seeking to join KLM’s supervisory board, according to one person familiar with that matter. That’s likely to be opposed by executives at the Dutch carrier, who have sought to to maintain independence from its French partner in the past.

In a sign at how politically charged the issue has become in the Netherlands, the Dutch government sent a letter to KLM’s supervisory board to praise Elbers’ record, Finance Minister Wopke Hoekstra said on Friday.

Air France-KLM shares have gained 10 percent this year, following a 30 percent plunge in 2018. They traded down 4.1 percent at 10.28 euros at the close in Paris, valuing the carrier at 4.4 billion euros ($5 billion)